THE battle for the ownership and control of supermarket
chain Choppies Zimbabwe — on paper owned 51% by Nanavac Investments run by
former vice-president Phelekezela Mphoko’s family and 49% by Botswana’s listed
Choppies Enterprises Limited backed by that country’s former president Festus Mogae
— intensified this week, with the Zimbabwean shareholders moving to boot out 50
Indian workers seconded to the local operation with 32 shops across the
country.
This came as Mphoko warned he would not accept a
“Gupta-style” hostile takeover bid by the Botswana shareholders led by company
chairman Mogae and chief executive Ramachandaran Ottapathu who holds 34,2%
equity in the group.
Mphoko, who lost his position when former president Robert
Mugabe was toppled by the military last November and replaced by his then fired
co-deputy Emmerson Mnangagwa, said “unlawful” seizure of the company would not
be tolerated and would be resisted by legal means.
“The law is very clear. We held a 51% stake from the
beginning because retail is a reserved sector under the law in Zimbabwe which
may have changed, but still protect our rights in that specific area,” Mphoko
said in an interview yesterday. “Anything else is illegal. These guys are
trying to Gupta (rob) us, but their Gupta theories and approach won’t be
accepted and won’t work.”
The Guptas are a wealthy Indian-born South African family
whose most notable members are the brothers Ajay, Atul and Rajesh “Tony” Gupta.
They were involved in dodgy business deals and embroiled in allegations of
corruption in South Africa during former president Jacob Zuma, their
benefactor’s term.
While Mphoko vowed to dig in, Choppies Enterprises said it
would invoke clauses in the shareholders’ agreement to buy back 44% from the
Mphoko family at nominal value.
In an interview this week, Ottapathu, known as Ram in
business circles, said the multinational retail group feels it is time the
Mphokos exited the business for them to assume 100% ownership and control.
“At a board meeting in 2014, the former vice-president
complained that shares they held in Choppies, 7%, was too small. His son
(Siqokoqela) corrected him on that. It is recorded as part of minutes for that
meeting,” Ottapathu said.
“With all this that has been taking place and with the
shareholder feeling the situation is now ripe to take over the business because
the indigenisation laws are no longer as they were in 2013, the shareholders
are considering exercising their rights as per the agreements, meaning to
recall the 44%, while at the same time buying Siqokoqela out on the remaining
7%.”
On the shareholding structure, Ottapathu added: “We can’t
continue with the 51% deal; we agreed at the time they would get 7% for helping
us set up business in Zimbabwe. They have all along been getting dividends
based on the 7% they actually hold.”
However, Mphoko said: “They want to undermine Zimbabwe’s
laws and us as locals, they are crazy. The President (Mnangagwa) has been clear
on what the policy and the law now are on this issue; so we won’t allow them to
rob us.”
Mphoko said last week Ram was trying to rope in Mnangagwa
and government to revisit the shareholders’ agreement and other documents,
insisting his family is the biggest shareholder in Choppies Zimbabwe
operations.
Mphoko is a 25,5% shareholder in Nanavac, a vehicle he,
alongside his son Siqokoqela, formed to do business in Zimbabwe. Siqokoqela
also holds a 25,5% stake, bringing this to 51%. Choppies Enterprises holds the
other 49%, although it says the “51%” was only agreed to bypass indeginisation
laws under Mugabe. In reality, Mogae and his allies, including Ram, say Mphoko
was given 7% for free.
Ram says their agreement with “a call option” — choice to
buy back shares — was signed on December 22, 2015.
Clause 3.1 of the agreement reads: “Out of the total 51%
with the Mphoko family, Choppies will have call option on 44%, which (means) in
turn the Mphoko family will have 7%.”
“Upon exercise by Choppies of the call option, a sale shall
be concluded in respect of the option shares on the following terms: (1) the
purchase price of the option shares payable to Siqokoqela Mphoko shall be an
amount of US$1 (One United States Dollar) per option share; (2) All the
benefits and risks of ownership of the option share shall pass to Choppies on
the date of exercise of the call option; (3) Choppies shall procure that any
share acquired by it in terms of the clause 3, shall be held as treasury shares
for the exclusive purpose of disposal thereof to an indigenous Zimbabwean, as
prescribed by the legislation prevailing at the time of disposal.” Last week,
the Mphoko family said it had, together with Choppies Enterprises, secured a
US$20 million bank loan in Botswana to finance the business, a claim Ottapathu
says is ridiculous as Mphoko “can’t get a loan for himself even for one rand!”
Mphoko insisted: “The law is very clear, the retail sector
remains reserved for locals. So they can’t be allowed to undermine the laws of
the country as and when they wish.”
Siqokoqela yesterday escalated the fight through a letter
to Immigration Department principal director Clemence Masango, saying Nanavac
will not extend work permits for 50 Choppies Zimbabwe foreign employees.
However, he said Nanavac will only secure work permits for four Indian
expatriates yet to be identified.
“Please, kindly be informed that the said Indian experts
have successfully accomplished their mission of imparting knowledge to Nanavac
Investments employees and Nanavac Investments will not extend their work
permits,” the letter says. Zimbabwe Independent
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